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(THIS DOCUMENT IS THE PROPERTY OP HIS BRITANNIC MAJESTY'S GOVERNMENT.)

S E C R E T . COPY NO. C A B I N E T 24 (37).

Meeting of the Cabinet to be held at No. 10, Downing Street, S.W.I., on WEDNESDAY, 17th JUNE, 1937,

at 11.0 a.m.

AGENDA.

1. POREIGN.. AFFAIRS. (A) Situation in Spain - (if required).

(Reference Cabinet 23 (37) Conclusions 2 & 3). (b) Extra-Territcriality in China.

Memorandum by the Secretary of State for Foreign Affairs.

C P . 153 (37) - already circulated. (c) Obstacles to International Trade: M. Fr$reTs Mission.

(Reference Cabinet 19 (37) Conclusion l). Memorandum by the Secretary of State for Foreign Affairs.

C P . 158 (37) - already circulated.

2. THE IMPERIAL CONFERENCE - (if required). (Reference Cabinet 23 (37) Conclusion 10).

3. CEYLON: THE BRACEG-IRDLE CASE. Memorandum by the Secretary of State for the Coldnies.

C P . 156 (37) - circulated herewith.

4. EXTENSION OF THE MILK ACTS 1954 and 1936. (Reference Cabinet 58 (36) Conclusion 9 and Appendix). Joint Memorandum by the Minister of Agriculture and Fisheries and the Secretary of State for Scotland.

C P . 152 (37) - already circulated. Memorandum by the Minister of Health.

C P . 154 (37) - already circulated.

5. THE CORONATION: SEATING OF MEMBERS OF THE CABINET. (Reference Cabinet 22 (37) Conclusion 13). Note by the Secretary covering draft letter to the Earl Marshal.

C,p, 148 (37) --already circulated.

NATIONAL DEFENCE CONTRIBUTION. (Reference Cabinet 17 (37) Conclusion 1.) Statement to be made by the Chancellor of the Exchequer as to the form of the proposed new tax.

6o CONCLUSIONS OF HOME AFFAIRS COMMITTEE. 9th Conclusions (37) of Committee of Home Affairs ­to be circulated.

(a) Agriculture Billo (Reference Cabinet 22 (37) Conclusion 5) Memorandum by the Minister of Agriculture and Fisheries, covering draft Bill.

H.A. 22 (37) - to be circulated. Memoranda by the Secretary of State for Sco tland.

C P . 157 (37) - to be circulated. H.A. 25 (37) - to be circulated.

Memo, by Min. of Agriculture - CP.159(37). (b) Nigeria (Remission of Payments) Bill.

(Reference Cabinet 6 (37) Conclusion 2) Memorandum by the Secretary of State for the Colonies, covering draft Bill.

H.A. 26 (37) - to be circulated. (c) National Health Insurance (Juvenile

Contributors and Young Persons) Bill. Memorandum by the Minister of Health, covering draft Bill.

H.A. 23 (37) - circulated herewith. (d) Rating and Valuation Bill.

(Reference Cabinet 23 (37) Conclusion 9) Memorandum by the Minister of Health, covering draft Bill.

H.A. 24 (37) - already circulated.

(Signed) M.P.A. HANKEY Secretary to the Cabinet,

2, Whitehall Gardens, S.W.1. June 12th, 1937.

(TOTS DOCUMENT IS THE PROPERTY OP HIS BRITANNIC MAJESTY'S GOVERNMENT. )

S JE C R E T. COPY NO. C A B I N E T 24 (57).

CONCLUSIONS of a Meeting of the Cabinet held at 10, Downing Street, S.W.I. , on WEDNESDAY,

the 16th JUNE, 1937, at 11.0 a.m.

PRESENT: The Right Hon. Neville Chamberlain, M.P.,

Prime Minister. (in the Chair). he Right Hon. The Right Hon. "Sir John Simon, G.C.S.I., The Viscount Halifax, K.-G., G.C.V.O., O.B.E., K.C., M.P., G.CS.I., G.C.I.E., Lord Chancellor of the Exchequer. President of the Council.

he Right Hon. The Right Hon. The Viscount Hailsham, Sir Samuel Hoare, Bt.,G.C.S.I. Lord Chancellor. G.B.E., C.M.G.,- M.P.,Secretary

of State for Home Affairs. he Right Hon. The Right Hon.

Anthony Eden, M. C., M.P., The Earl De La Warr, Secretary of State for Foreign Lord Privy Seal. Affairs.

he Right Hon. The Most Hon. Malcolm MacDonald, M. P., The Marquess of Zetland, Secretary of State for Dominion G.C.S.I., G.C.I.E., Secretary Affairs. of State for India.

he Right Hon. The Right Hon. W. Ormsby G^re, M.P., Sir Thomas Inskip, C.B.E., Secretary of State for the K.C., M.P., Minister for Co-Colonies. Ordination of Defence.

he Right Hon. The Right Hon. A. Duff Cooper, D.S.O., M.P., L. Hore-Belisha, M.P., First Lard of the Admiralty. Secretary of State for War.

he Right Hon. The Right Hon. The Viscount Swinton, G.B.E., Oliver Stanley, M.C., M.P., M.C., Secretary of State for President of the Board of Trade. Air.

he Right Hon. The Right Hon. W.S. Morrison, M. C.,K.C.,M.P., The Earl Stanhope, K.G.,D.S.O. Minister of Agriculture and M.C., President- ofc^he Board Fisheries. of Education.

lie Right Hon. ; The Right Hon. Sir Kingsley Wood, M.P., Ernest Brown, M. C., M.P., Minister of Health. Minister of Labour.

The Right Hon. E.L. Burgin, M.P., Minister of Transport.

THE FOLLOWING WERE ALSO PRESENT: The Right Hon. T.M. Cooper, K.C., M.P. ,

Lord Advocate. (P*r Conclusions 7 and 8).

kernel Sir M.P.A. Hankey, G.C.B., G.C.M.G., G.CV.0. ... Secretary.,

THE SITUATION IN SPAIN.

(Previous Reference: Cabinet 23 (37), Con­clusions 2 and 3.)

bombing of the DEUTSCHDAND were in process of being cleared up. After discussions, the British, French, German and Italian Governments had addressed a Note to the Spanish Government and the Spanish Insurgents asking for certain assurances. If these were received

the German and Italian Governments would return to collaboration in carrying out the non-intervention scheme. When the matter had been discussed on the previous Saturday he had tried to get the German and It al ian/IJfl*Ea."Qo b-a-ete-a fetii-opeTat^jwr*a*te-^a^eo. The

Italians had been rather forthcoming on the subject, but.the Germans less so. That very morning he had received a letter from Count Grandi saying that the Italian/Uesfy would resume co-operation at once and that he had every hope that the same afternoon a joint letter \vould be sent to the Chairman of the Non-intervention Committee by the German and Ita.lia.n Ambassadors undertaking to return to co-operation. The French proposals for combining the Fleets of the four Powers carrying out non-intervention had been rejected.

The Secretary of State then asked for favourable consideration to the suggestion for attaching neutral observers to the worships engaged in carrying out the non-intervention scheme. The Italians were willing to consider it, but the Germans were less favourable. It would have the advantage of increasing confidence in the scheme, and might be useful in the event of a repetition of an incident like the bombing of the DEUTS CHLAND.

The First Lord of the Admiralty said that he would not oppose the examination of the project, but there were grave objections to it. Moreover, in the view of

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the Admiralty it. was not likely to be of much practical value. Special arrangements would he required to avoid neutral observers penetrating into the more secret parts of a ship. Although, as the Secretary of State for Foreign Affairs had suggested, it might give confidence to the Spanish Government and the Insurgents that ships engaged on non-intervention would not be used for bombardment purposes or for sinking their vessels, it

had to be remembered, that the Powers concerned. ha.d other ships in Spanish waters besides those being used for non-intervention, and. if they had any sinister designs the former ships would be used.

The Minister for Co-ordination of Defence said that from a study of reports on non-intervention he got the impression that arms and munitions and aircraft were flowing into Spain in spite of the non-intervention scheme. He had an idea that more was going in from ' Italy than fr-om Russia.

The Secretary of State for War confirmed that the latest intelligence indicated, that Signor Mussolini was allowing a good deal of material to go to Spain.

The Secretary of State for Foreign Affairs said, that April had. been a bad. month, but May had. been somewhat better. Undoubtedly there were considerable leaks. At one time some of his advisers in the Foreign Office had doubted whether it was worth going on with the scheme but he had. reached, the view that the state of affairs would be worse if the scheme were dropped, - he -hardest gap in the scheme to close was the flight of aeroplanes from Italy to Majorca and Spain.

In reply to a question he said that he had,seen no reply from General Franco to our Note protesting against the laying of submarine mines in the open sea.

The Cabinet agreed — (a) That the Secretary of State for Foreign

Affairs should discuss with the First^" Lord of the Admiralty the question of attaching neutral observers to men-of-war engaged in the non-intervention scheme:

(b) That, notwithstanding the failure of the non-intervention scheme to prevent the flow of war material of various kinds to Spain, the situation would, certainly be worse if the scheme were dropped.

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in GERMANY.

(Previous Reference: Cabinet 23 (37), Con­el usr ion

2. "Tie Secretary of State for Foreign Affairs said that the visit of Earon von Neurath, the German Foreign Minister, ought to he useful. He had informed the French Government and had heard that morning that M. Delbos was not unduly perturbed. The proposal had originally arisen out of the bombing of the DEUTSCHLAND, and consequently Spain had been mentioned among the subjects to be discussed. Baron von Neurath had first refused to have Spain mentioned publicly, but eventually had agreed. His refusal had perhaps been a result of the Berlin - Rome"axis" and out of deference to Italy. Baron von Neurath*s reversal of attitude, however, and

his consent to the inclusion of Spain among the subjects to be discussed were perhaps connected with the more forthcoming attitude of the Italians in regard to the non-intervention scheme within the last few days.

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tra-T.erritQ.rt- secretary of State for Foreign Affairs (C.P.-153 (37)) CHINA.

xty in.

PrevxousReference:95"!?fne!, 9 2

(31), Con­elusion 3 .)

9 73 g. rp g Cabinet had before them a Memorandum by the;

stating that the United. States Government requested. the views and. observations of His Majesty's Government d

on the question of the resumption of negotiations for M B

the abolition of extra-territoriality in China. The United. States Government were in favour of resumption, and enquired whether His Majesty's Government thought­it would be better for the foreign Governments to take the initiative in approaching the Chinese Government, or to await proposals from China. An interim reply had been sent to the United States Embassy favouring the latter course pending a decision on the important points o^ policy involved. The Secretary of State suggested that, negotiations should be begun on the basis of a draft Treaty drawn up in June, 1931, since when the whole question of extra-territoriality had remained in abeyance. The greatest difficulty arose out of the peculiar position of the International Settlement at Shanghai and the neighbouring areas, which were excluded, from the operation of the draft Treaty, and. the Secretary of State suggested, that it would be best to insist now, as in 1931, on complete exclusion, in order to afford time for further negotiations. It seemed desirable, also, in view of the present conciliatory attitude of the Japanese, to propose to them to adopt the same

- attitude as ourselves and. the United States over the question of extra-territoriality — a point on which His Majesty's Amba.ssa.dors at Peking a.nA Tokyo were being consulted.

After the Secretary of State for Foreign Affairs had made a statement on the lines of his Memorandum the Lord Chancellor recalled that in 1930 he had paid a visit to China. There was no doubt that politically­minded Chinese desired the abolition of extra­

territorially, but. the Europeans were apprehensive. He had visited Tientsin, where the German and Russian Settlements had already been handed back to the Chinese and presented a. very unfavourable contrast with the adjoining British Settlement * In Shanghai the leading British inhabitants had been horrified at. the idea of handing the International Settlement over to the Chinese. Although the Chinese Legal Code was admirable it was not honestly administered by the Chinese Judges, of which he gave examples. He hoped, therefore, that the Foreign Office v/ould consult the leading firms in China, and- the Shanghai Municipality, before making a change which he believed v:-ould be disastrous to our trade and. embarrassing to the Chinese themselves, who preferred the sa.fety o^ Shanghai to the precarious conditions outside.

In the course of the discussion it was shown that the Government of India, the -Var Office a.nd the Board of Tra.de had. special interests in this question and would, wish to be informed of the progress of negotia.­tions and consulted on their own aspects.

The Chancellor of ^he Exchequer communicated to the Cabinet the views obtained in writing from Sir Frederick Leith-Ross. who thought that the Foreign Office Memorandum tended to pa.int the Chinese adminis­tration in too favourable a. light:. He himself agreed. He and Sir Frederick Leith-Ross both thought it inevitable, in the long run, that we should have to give up extra-territorial rights as in Egypt, but that we should walk very warily. It. was the Japanese who were likely to get a. foot in where our position was weakened. It had to be remembered that, in 1933 our position in the International Settlement had h^d a good deal to do with getting the Japanese out of China. It also had. to be remembered that the main economic need of China

was the investment of foreign capital in China.., and that , was not to be secured by the abolition of extra­t. errit oriality, which would reduce the confid.ence of foreign investors. Sir Frederick Leith-Ross had. suggested to him that the Chinese found the collection of income-tax in the International Settlement very difficult, since some foreign tax-payers used, their extra-territorial rights for the purpose of evading income-tax. Sir Frederick thought it possible that if that difficulty coul^ be surmounted it would go far to

Chancellor's help the Chinese. The/ own attitude was that sooner or later we should, have to abandon extra-territorial rights, hut that it was largely a matter of time and method. In any event he could not agree to a time-limit, which was really only another method of giving way.

The Secretary of State for Dominion Affairs, who had also travelled in China, in 1929-30, agreed generally with the opinions that had already been expressed as to the views of British residents in China, which were not likely to have changed . He agreed, also that Shanghai must be excluded from the scheme. Vhile we should, not take the initiative in raising the matter with the Chinese, he thought that if the Chinese took it up we

, should avoid becoming the spearhead, of a resistance. Tn that event "e should not be too rigid, but should make the best bargain we could.

The Prime Minister pointed, out that the present position was that we were being approached, not by the Chinese *ut by the United States of America. The choice appeared, to be whether we should, wait or take the initla­tive in the matter.

The Secretary of State for Foreign Affairs agreed with most of the remarks of his colleagues. He had gathered from the Foreign Office that, morning that the Chinese were not pressing the matter at the moment.

He did not wish to take any initiative. If the United States of America asked for our view he would reply that we would prefer to wait until the Chinese raised the question* He did not propose to go into details with the United States of America, hut if they raised the matter he would reply on the lines indicated, in his Memorandum. For exa.mple, if the question of Shanghai were raised he would state that we should prefer to have Shanghai excluded from any extra-territoriality negotia­tions. He was advised by His Majesty'?. Ambassadors in Tokyo and Peking that it. would he better not to raise the question with the Japanese Government unless the Chinese Government brought it up.

The Prime Minister said that the line proposed by the Foreign Secretary was in accord with the views expressed at the Meeting.

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N A T T 0 N A LT R A D ? 4. The Cabinet took note of a Memorandum by the 7"Obstacles to. Secretary of State for Foreign Affairs (CP.-158 (37))

^ N . circulating a highly confidential note on the first M. Frere s Mission. stage in the mission of M. Frere, who, under the . . instructions of M, van Zeeland, is carrying out an J(Previous . *Reference: inquiry in the principal European countries as to the Cabinet 19 (37), Con- practicability of the adoption of more liberal economic elusion 1.)

, \, policies, and especially of the relaxation or suppres­sion of quota restrictions and exchange controls. The note covered M. Frere's preliminary visits to Berlin, The Hague, Paris, Berne and Rome. He was now contiuing his mission, and his next voyage would be from Brussels to Paris, Warsaw, Prague, and back to Brussels.

& i 0 THE IMPERIAL 5. The Secretary of State for Dominion Affairs CONFERENCE.

recalled that the Cabinet had been kept informed of what (Previous was happening at the Imperial Conference by the eircula-Referenee: Cabinet 23 tion of the Minutes of the Meetings of the Principal (37), Con­clusion 10.) Delegates. He would, propose, however, to supplement

pr.2jlyj)these by a few reme.rks on the general results. First, he mentioned, that certain conclusions had.

been reached which had not been published, on such matters as Munitions, Civil Aviation, and Empire Trade. He proposed, after consult ation with the other Ministers concerned, to circulate a Memorandum on these aspects.

There had been a difference between the recent Conference and its predecessors. Since 1926 the Imperial Conferences had been mainly concerned with Constitutional Relations, and the tendency had been to lay the main stress on the nationhood of the Dominions, which had perhaps encouraged an impression abroad of some growing disunity in the British Commonwealth of Nations. The United Kingdom Delegation had entered, the present Conference with the idea of re-establishing the balance, not by minimising in any way the freedom, of the nations, of the Commonwealth, but. by bringing into greater prominence the aspect of co-operation. En this they had been successful, and. the general result of the Conference had been to re-assert somewhat the principle of co­operation, "his was important, because he hoped that this was the first of a series of Conferences in which that aspect would, tend to be stressed.

The main subjects of discussion, as announced before the Conference, had been Foreign Affairs and. Defence, tn the early part of the Conference there had. been one morning when matters had. not gone well with Foreign Affairs. The Canadian Prime Minister had. spoken in a ­slightly isolationist spirit, ""he Prime Minister of

New Zealand had -followed with a polite but rather comprehens ive attack on the united Kingdom foreign policy. General Hertzog had intimated the view that our attitude towards the French was too warm, and towards the Germans too cold. Even the Australian Delegation had rather criticised our opposition to the Anschluss. At the moment that had. produced rather a depressing effect, but he had felt that with education and patient communication of the facts all parties to the Conference would get into line. That was what had actually happened: the attitude of the Dominions had. gradually swung round towards our own. There was not, of course, complete identity of view on every point, but there was a spirit of co-operation. For example, Mr Savage would like a combined foreign policy of the Empire, though Canada and South Africa could not approach that. In spite of differences of that kind the spirit of co-operation had grown.

Summing up the results in Foreign Affairs and Defence, he said ­

(l) There had. been a complete exchange of view on international affairs and defence:

(2) As a result, the policies of the respective Governments were closer than they had been before the Confer­ence:

(?) The United. Kingdom had won the confidence of the Dominion Ministers who had sat roun'" the table and who had come to trust in our sincerity, decen^ and wisdom.

The Australian Prime Minister, of course, had never expressed any doubts. Mr Savage, the Leader of a Labour Government in New Zealand, which was rather inclined to criticise our foreign policy, had. said roundly one day that if the United Kingdom was at war New Zealand would be at war, whether the issue was right or wrong. General Hertzog on the previous evening had. said that after taking part in four Imperial Conferences he had

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on the present, occasion felt, for the first time a feeling of kinship with ourselves. Mr Mackenzie King was shout to visit Germany, where he would see Herr Hitler. After expressing sympathy with Hitler's constructive work and telling him of the sympathy which was felt with Germany in England , he intended, to add that if Germany should ever turn her mind from construe-1

tive to destructive efforts against the United Kingdom all the Dominions would come to her/aid and that there would be great numbers of Canadians anxious to swim the Atlantic! Wo doubt we should have our difficulties with the Dominions in the future, but. the Conference had heen a great stride forward in the direction of unity.

He thought much of the success was due to the skilful an^ attractive Chairmanship of the Prime Minister.

The Prime Minister, confirming the general impression of the Secretary of State for Dominion Affairs, felt that the personal relations established should prove of incalculable value in the future, ""he Cabinet could be sure that every question that was brought before the Dominions would be examined with a desire to reach agreement.

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The Brecegirdrle^Seeretary of State for the Colonies (C.P.-156 (37)) CEYLON,

Case.

6. The Cabinet had before there a Memorandum by the

relating to the case of a Mr Bracegirdle, who, having failed to comply with an order by the Governor to leave Ceylon on account of Communistic activities, had been arrested -so that a. deportation order might be carried out. The Governor's order was made under an Order in Council passed in 1696, intended for use in case of war or any grave local emergency but still in operation in Ceylon. On an application for a writ of habeas corpus the Supreme Court of Ceylon had ruled that the order for deportation was ultra vires . It was understood, that Mr Bracegirdle was now considering . instituting civil proceedings against the Governor personally, claiming damages presumably for false imprisonment, and the Governor asked, that a special new Order in Council, indemnifying him and the other Officers concerned, in the case, should be proceeded with immediately. It was undesirable that the Governor should be exposed to such an action; but to pass an Order in Council over the head of the Ceylon Legisla­

and depriving a subject of his legal right ture/would be a strong step. It might well be held that the proper constitutional course would, be for the Governor to invite the local Legislature to pass a measure providing such indemnity as might be required. In view of the decision of the Supreme Cc .irt the Secretary of State proposed to instruct the Governor formally to declare that the Order in Council of 1896 had ceased to operate in Ceylon. In the event of any emergency a.rising, recourse would be had to an Order in Council of 1928. He proposed also to consider the possibility of passing fresh legislation in the Ceylon State Council to provide for the deportation of British subjects in proper circumstances.

The Secretary of State for the Colonies explained the whole matter to his colleagues. In the course of his statement he read the following extract from a memorandum by the Legal Adviser to the Colonial Office giving his reasons why he could find no justification for the use which had been made by the Governor of the Order in Council of 1896:­

"I cannot find any justification for the use which was made of this Order in Council by the Governor and, to my mind, too much importance has been placed upon the Secretary of State's despatch in 1928, seeing that that was sent nine years ago, and before Ceylon had been granted its present constitution,,

The present constitution of Ceylon is, subject to certain safeguards, a form of self­government. It is true that we have reserved the right to legislate by Order in Council, but I feel little doubt that the intention of this reservation was to enable us, if necessary, to deal with constitutional matters and with matters of defence and other large Imperial interests. To use that power in defiance (as we believe) of the will of the Legislature in Ceylon, to deprive an individual of his civil rights, seems to me to be unconstitutional and not a proper exercise of the power.

Further, I know of no reason why an individual who has suffered a wrong should be deprived of any remedy which he may have in a court of law. Such a thing would be quite impossible here, and I do not know why, or upon what principle, the liberty and rights of the subject should be less respected in Ceylon; and the fact that Bracegirdle seems to be a thoroughly unpleasant person does not seem to me to have any relevance to the determination of questions which depend upon high constitutional principles.

To my mind the spectacle of a Governor, or the Chief of Police, being made subject to the consequences of an illegal action is more likely to enhance the impartiality and integrity of British rule than is his protection from Downing Street over the head of the Legislature in Ceylon, and at

. - the expense of an individual whom he has wronged." He also read a private letter from the Chief Justice of Ceylon addressed to an official in the Colonial Office which had been shown to him and the purport of which was to the same effect as the Legal Adviser's memorandum.

In the course of the discussion, the Lord Chancellor expressed the view that it would not he possible to pass an Act depriving Mr. Bracegirdle, however objectionable a person he might be, of his legal rights. In his view, the Governor, who had acted on constitutional advice, ought to be indemnified against the results of his action and there,were,jprob.ably others, policemen and-so forth who acted on the Governor's decision who also must be protected. He was inclined to follow the precedent of the Art 01Brien case in this country some years ago when an Act of Indemnity had been passed through Parliament in the United Kingdom in order to protect the Home Secretary and others concerned and an enquiry had been set up to assess the damages to be awarded.

The Chancellor of the Exchequer, nfeile,agreeing.­pass an Act cf Indemnity

with the proposal to/ urged that it would be undesirable to announce the Government's intention before the action was brought by Mr. Bracegirdle, since to do so might increase the amount of damages that would be awarded.

The Secretary of State for the Colonies said that he had consulted Sir Baron Jayatilaka, the Minister for Home Affairs in the Ceylon State Council, about this proposal and he had told him that it was the one which at the moment commended itself to him. The Ceylon

Minister for Home Affairs, however, had not been willing to^commit himself to a view as to whether the Ceylon

State Council would pass the proposed legislation. If not, the Governor would have to certify it. . In ]repiy to a suggestion that this would be somewhat embarrassing to the present Governor after what had happened, he pointed out that certification would take place on the responsibility of the Secretary of State for the Colonies and not the Governor. In any event, the present Governor was due to

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leave during the present Summer and certification would have to be made by his successor.

In reply to the Prime Minister, he said that the recommendations in paragraph 12 of C P . 156 (37) should be carried out.

The Prime Minister thought that this was necessary in order to bring out the point that, in making a mistake, the Governor had done so on a technical issue.

The Cabinet agreed: (a) To concur in the proposal of the

Secretary of State for the Colonies that he should instruct the Governor formally te declare that the Order in Coune.il of 1896 has ceased to be in operation in Ceylon. In the event of any emergency arising, recourse would be had to the Order in Council of 1928. The Cabinet also took note that the Secretary of State was considering the possibility of passing fresh legislation in the Ceylon State Council to provide for the deportation of British subjects in proper circumstancesi

(b) That it would be necessary to indemnify the Governor and any officials who might have acted under his authority against any consequences (pecuniary or otherwise) which might follow from the action which the former had taken on constitutional advice:

(o) That any claims assessed by a Court of Justice should (following the precedent of the -t^Brien pa-se) be paid from the revenues of Ceylon, but that this should not be announced publicly before Mr. Bracegirdle's claims had-been adjudicated:

(d) That indemnification could best be obtained by the passing of the necessary legislation by the Ceylon State Council:

(e) That, if the Ceylon State Council did not pass the legislation, the Governor should be authorised to certify it..

(The Lord Advocate entered at this point.) 9

AOTS 7. The Cabinet had before them the following docu­1935'.

roents:­i of.

A Joint Memorandum by the Minister of Agriculture an^ Fisheries and the Secretary of State for Scotland (CP.-152 (37))

PR

cet seeking the concurrence of their colleagues 58 to the"preparation of a Bill, to be passed

on- into law before the Summer Recess, to extend 9 & for a further year, until September 30, 1938, x.) the period during which Exchequer grants may

, / v- be made under the Milk Acts, 1934 and 1936, ZH 3// - respect of milk used for manufacture, and i nalso to provide for further Exchequer grants

on existing lines for the Milk-in-Schools scheme and other schemes for increasing the demand for milk. It was hoped that before the end of the year- to be covered by the proposed extending Act a measure to give effect to the Government's long-term milk policy would be on the Statute Book. The Ministers proposed that the present Bill should, adhere as closely as possible to the orieinal intention of the 1934 Act, but that payments in respect of milk manufactured in Northern Ireland should be discontinued: A. Note by the Minister of Health (C .P.-154 (37)) pointing out that a number of assurances had been given in both Houses of Parliament that the Government had under consideration the development of schemes for providing cheap milk to mothers and infants, and that the amount of money which it was intended to provide under the Bill would do no more than suffice for the Milk-in-Schools scheme and possible extensions of that scheme. The Bill would undoubtedly meet with criticism on that score, but he thought the force of it would be much reduced if in any announcement of long-term policy made before the Recess it was possible to hold out an expectation that the re-organis?tion of the industry was likely to result in a reduction of the price of liquid milk either generally or for special classes of consumers, including mothers and infants.

In the course of a discussion In" which the points of view of the Minister of Agriculture and Fisheries, the Minister of Health, the President of the Board of Education Chancellor *f the Exchequer were put forward, it was found that the whole matter required further exploration in its political and financial aspects..

The Cabinet accordingly agreed: That a Cabinet Committee composed as follows:

The Chancellor of the Exchequer The Secretary of State for Scotland The Minister of Agriculture and Fisheries The Minister of Health The President of the Board of Education

should consider the documents prepared for

the Cabinet (C,P. 152 (37) and C P . 154 (37)) and submit a report.

The Committee was not asked to examine the long-range milk'policy at the present stage.

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7HE AGRICULTURE C. The Cabinet had before them the following ' SILL.

documents on the subject of the Agriculture Bill, (previous References? which had been considered by the Committee of Home Cabinet 21 (757), Con- Affairs on the previous day (H.A.C. 9th Conclusions, elusion 1 and Cabinet 22 (37) Minute l) .*­(3 7) , Con­elusion A Memorandum by the Minister of Agriculture

and Fisheries (H.A.-22 (37)) covering a. F.R.zs(y])\. draft Bill, the object, of which was the

improvement of the productivity of the soil: A Memorandum by the Secretary of State for Scotland (H.A.-25 (37)) on the question of the responsibility for the administration of Part IV of the Bill in Scotland.

The conclusions reached by the Committee of Home Affairs were as follows -'­

"( i) To reserve for decision by the Cabinet the question of principle whether the administration of Part IV of the Agri­culture Bill should be entrusted, throughout. Great Britain to a unified veterina.ry service, a.s proposed, by the Minister of Agriculture and Fisheries, or should be entrusted in Scotland to the Scottish Department of Agriculture, as proposed by the Secretary of State for S cotland :

(ii) Subject (a) to a decision on (i), (b) to further consideration of Clauses 6, 9, 10 (3), 13, 14 and 27 in the light of the discussion, and ( c) to any drafting or other minor alterations that may be found necessary or desirable, to recommend the Cabinet to authorise the introduction forthwith in the House of Commons, with a view to its passage into lav/ before the Summer Recess, of the Agriculture Bill in the form of the draft annexed to H.A.-22 (37)

In addition to the above the Cabinet, had before them A Memorandum by the Secretary of State for Scotland (CP.-157 (37)) giving his reasons for holding the view that the campaign for the eradication of animal diseases and the extens-ion for this purpose of the State Veterinary Service "approved by the Cabinet at the Meeting first mentioned, in the margin) should be administered in Scotland by a Scottish Department: and suggesting that a small Cabinet Committee should be set up to consider the question of whether the State Veterinary Service should be one service for the whole of Great Britain, or two services, one for England and Wales and one for Scotland: A Memorandum by the Minister of Agriculture and Fisheries (CP.-159 (37)) concurring in the proposal for the setting up of a Cabinet Committee, and putting forward the considera­tions which he felt justified his view that the State Veterinary Service should, be in respect of the whole of Great Britain.

- 19 ­

The discussion began by consideration of the question of principle in regard to the Departments to administer Part IV of the Agriculture Bill, the conclusions of which are set forth below.

On the conclusion of the above discussion, the Lord President of the Council raised three other points, namely ­

(l) A point of principle and procedure that as sometimes happened in the case of other Bills, the present Bill contained a proposal that had not been before the Cabinet when the subject matter of the Bill had been under discussion, viz. ­

(2) The inclusion in Clause 9 of the Bill of powers to prevent negligent farming. He criticised this as being of doubtful effectiveness and asked why such powers were required for oats and barley when they were not included in the case of wheat:

(3) The Bill would create a new statutory committee named the Land Fertility Committee. He thought the land community were getting rather tired of the appointment of new highly paid committees and he suggested that some other machinery for the administration of the Bill might be created. The Minister of Agriculture and Fisheries

said he had no t overlooked the point that it would be necessary to introduce new matter into the Bill, since the subject had first been considered by the Cabinet. His intention had been to draw the attention of the Cabinet to this but this had been impossible because, owing to the Imperial Conference, there had been no meeting of the Cabinet in the previous week. As time had been pressing, therefore, he had brought the Bill before the Committee of Home Affairs. As regards the second point,namely, negligent farming, he pointed out that the subsidy in the case of the Wheat Act was payable on the amount of wheat of millable quality which provided a check since,if the farming was bad and the

jidcL ff- -£ext+r

^millable quality was f e w , the payment was small. In

the case of barley or oats, however, payment was to be made on an acreage basis and some check/had to be CJ

provided. He had followed the same method as had been adopted in the case of the Corn Production Act, 1917, and the^ieat Act of 1920, where the subsidy had been on an acreage basis. As regards the third criticism, namely the Land Fertility Committee, this was not a case, he thought, where the members of the Committee would all be highly paid. He recalled that in the case of the Cattle Committee, for example, most of the members received no remuneration. He would gladly reconsider the name of the Committee if that was objected to. It was, however, necessary to have some central organisation.

The Minister of Health said that the Committee of Home Affairs had devoted a great deal of time to the consideration of this Bill and had a very useful discussion.

The Prime Minister said that as there was a matter of urgency to be brought before the Cabinet, he must adjourn the discussion at this point.

The Cabinet agreed: (a) That a.. Cabinet Committee

composed as follows:-The Secretary of State for India

(In the Chair) The President of the Board of Trade The Minister of Health

with the assistance of The Minister of Agriculture and

Fisheries The Secretary of State for Scotland should examine and advise the Cabinet on the question of principle whether the administration of Part IVl of the Agriculture Bill should be entrusted throughout Great Britain to a unified veterinary service, or in Scotland to the Scottish Department of Agriculture:

- 21 - .

(b) That the above Committee should be asked to report at the next weekly meeting of the Cabinet.

(The Lord Advccate left at this point.)

2 d1 THE CORONATION. 9. In pursuance of the Conclusion mentioned in the Seating of margin, the Cabinet had before them a Note ' CP.-148 Members of the Cabinet. (57)), circulated by authority of the Prime Minister,

on the subject of the Seating of Members of the Cabinet (Previous Reference: at the Coronation, to which was attached for approval Cabinet 22 (57), Con- the draft of a letter to the Earl Marshal. The elusion 13 .)

Chancellor of the Exchequer, who as Home Secretary FR. iL(?n)u-.

had undertaken to transmit the views of the Cabinet to the Earl Marshal, now thought it would be better if the letter were signed by the Secretary to the Cabinet.

As a result of a short discussion, the Cabinet agreed:

(a ) That the Secretary to the Cabinet in place of the Home Secretary should transmit the views of the Cabinet on the subject of the seating of members of the Cabinet at the Coronation to the Earl Marshal:

(b) That the letter attached to C P . 148 (37) should be amended in the following points:­

(i) by the omission from the fourth paragraph of the word "general** before "view":

(ii) by the inclusion of a reference to the unsatisfactory position of Privy Councillors:

(c) That the Secretary of State for Dominion Affairs should, if he thought necessary, write separately to the Earl Marshal asking that his Department should place on record for future use in any State Ceremonies of the kind that, in view of the principle of equality of status of the Dominions, the arrangements for Cabinet Ministers of the Dominions should be on the same footing as for Cabinet Ministers of the United Kingdom.

THE NIGERIA 10. The Cabinet had under consideration a Memorandum (REMISSION 3P PAYMENTS) by the Secretary of State for the Colonies (H.A.-26 BILL­

(37)) covering the draft Nigeria (Remission of Payments) (PreviousReference:

Bill, the object of which was to extinguish the liability Cabinet 6(37), Con­ of the Government of Nigeria, which was responsible for

clusion 2.) the administration of the territories formerly adminis­tered by the Royal Niger Company, to pay to the Exchequer the surplus receipts from those territories as required. by Section 3 of the Roya.1 Niger Company Act, 1899: together with the following recommendation of the Committee of Home Affairs thereon (H.A.0- 9th Conclu­s ions (3 7), Minute 2 ) : ­

"To authorise the int-reduction forthwith in the House of Commons, with a view to its passage into law in the present Session, of the Nigeria (Remission of Payments) Bill in the form of the draft annexed to H.A.-26 (37), subject to any drafting or other minor amendments that may be foun^ necessary or desirable."

The Cabinet agreed: To approve the recommendation of the Committee of Home Affairs as set forth above.

THE NATIONAL 11. The Cabinet had under consideration a Memorandum HEALTH INSUR-ANCE (JUVENILE by the Minister of Health (H.A.-23 (37)) covering the CONTRIBUTORS AND YOUNG draft National Health Insurance (Juvenile Contributors PERSONS) BILL.

clusion 11.) become employed before reaching the age of 16, and thus

and Young Persons) Bill, the object of which was to (PreviousReference:

provide medical benefit under the National Health Cabinet 60(36), Con­

Insurance Act to boys and girls who, on leaving school,

FR. 1 37)2.**-. to bridge the gap in medical supervision which at present exists between the school medical service and the commencement of full insurance under the National Health Insurance Act: together with the following recommendation of the Committee of Home Affairs thereon (H.A.C. 9th Conclusions (.37), Minute 3) :­

"To authorise the introduction forthwith in the House of Commons of the National Health Insurance (juvenile Contributors and Young Persons) Bill in the form of the draft annexed to H.A.-23 (37), subject to any drafting or other minor amendments that may be found, necessary or desirable."

The Cabinet agreed: To anorove the recommendation of the Committee of Home Affairs as set forth above.

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THE RATING ANDUATION BILL.

(PreviousRefer en ce: Cabinet 23(37) , Con­clusion 9.)

12. The Cabinet had under consideration a Memo­randum by the Minister of Health (H.A.-24 (37))

covering the draft Rating and Valuation Bill, the object of which was to continue for a further five years outside London the temporary provisions con­

tained in the Rating and Valuation Act, 1928, relating to the scales of deduction from gross values in calculating rateable values in respect of small property, and to compounding allowances which may be made to owners: together with the following recom­raend.ation by the Committee of Home Affairs thereon (H.A.C. 9th Conclusions (37), Minute 4)

"To authorise the introduction forthwith in the House of Commons of the Rating and Valuation Bill in the form of the draft annexed to H.A.-24 (37), subject to any draft­'ing or other minor amendments that may be found necessary or desirable."

The Cabinet kgreed: To approve the recommendation of the Committee of Home Affairs as set forth above.

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THE NATIONAL DEFENCE

13. The Chancellor of the Exchequer gave CONTRIBUTION. the Cabinet full details as to the form of the (Previous Reference:

proposed new National Defence Contribution Tax Cabinet 17 (37) Conclusion 1.)

as set forth in a White Paper to be issued -the same afternoon. He answered a number of detailed questions in regard to the tax.

hitehall Gardens, S.W.1. 16th June, 1937*